Some of the posts in this thread and some discussions in another message board I read occasionally have started me thinking about the economy. As far as I can tell we are in the beginning of a recession and that this is probably going to get worse before it gets better. Some other people I have seen and heard discussing the financial health of our nation seem to think that this is going to be bigger than a recession and that we are headed toward the new millenium version of the great depression.
The people I have seen talking about The Great Depression II: Electric Boogaloo tend to be people who strike me as the type who have an extra roll of aluminum foil in their drawer just in case they need to quickly make hats to protect their thoughts from alien invasion, so I don’t put much stock in their theory that we are about to be sucked into an economic crash of Ishtar proportions. However, when you look at the housing foreclosures and the fast rising cost of damn near everything I can see where some people would think that this could be a financial tsunami much bigger than most of us are expecting.
Is our current economic state stable or do you envision a much, much bigger problem coming before this is all said and done? Do you see this as a recession or the snowball at the top of Depression Mountian?
It’s difficult for me to judge how severe of a problem we are having here. For one thing, I’m living in Michigan, which has been in a substantial economic crisis for a while now… and currently we have the highest unemployment rate in the country, people cut from their jobs in an endless neverending stream. Things are bad. My father has worked in the same factory for over 10 years – he is one of 6 remaining out of the 160 originally at his little plant. I have no idea how Michigan compares to the rest of the country. It seems like everyone in this country has noticed climbing gas prices, the mortgage/credit crisis and the significant decrease in job security… but whether they feel the pervasive sense of hopelessness that Michiganders are feeling, I dunno.
The other thing is… I’m not personally doing too bad. I don’t own a home, I’m well-insured and my job (in credit counseling/bankruptcy) is VERY secure right now. Things are costing me more, but I have more money right now than I ever did before.
And because I was born in 1983, I’ve never really experienced anything like an economic crisis as a working adult. I wasn’t alive during the oil crisis of the 70s. I have no frame of reference. But I am really beginning to wonder how bad things are going to get before they get better. I talked to a family today who lost $136,000 in retirement funds over the last three weeks.
On NPR the other day there was an economist who commented, ‘‘One of the telltale signs of economic crisis is when even people with good credit cannot get loans.’’ This is what is happening right now.
I understand nothing about broader trends within the economy, I only grasp what’s in front of my face. People in Michigan who were previously middle class are now jobless, subsisting on government cheese and food stamps, fighting desperately to save their homes or living with family members. These are educated, employable people. The jobs just aren’t here.
It is by no means unanimous that we are even heading for a recession. Remember, this is an election year with a Republican incumbent, so the MSM is going to poor mouth the economy, regardless of facts.
People I trust are NOT forecasting even a recession.
Really? Anyone got any more info (cites?) on people with good credits being unable to get loans?
I don’t have anything else to add to this thread, other than the UP doesn’t seem any different than always. But then again, there never were any jobs up here, so we couldn’t tell if they ever went away.
I have heard a lot of talk about the impending recession or lack thereof and there are a lot of things that make me think a recession will be here soon or is already here and will just keep getting worse. This article talks about the housing crisis, stating that almost 7% of homes are in foreclosure and another 16.7% are behind in their mortgage payments with a prediction that as many as 3 million people could go into forclosure over the next few years as people with subprime loans cannot make their payments.
The cost of the basics for everyday life are skyrocketing. In my personal experience my health insurance costs have gone up 16% since I started with my current employer less than a year ago. This article talks about how average American families are looking at health care costs of about $14,500 per year, which is the eqivalent of 1/3 of their income. Grocery and gas costs have gone up considerably as well. As of November of 2007 gas had increased in cost by 23% in a single year, the cost of eggs had almost doubled, bread had gone up 10% and orange juice had gone up 28%.
According to USA Today a slim majority of economists (55%) don’t believe a recession is going to hit in 2008 but those same economists estimated a 2.6% gain by this point when we have only had 1.8% so far this year. I am hoping the economists are right and that we will see an upturn at the end of this year or the beginning of 2009 but somehow I don’t see that happening.
I don’t think there’s going to be a depression in the classic sense; I think the US is simply going to get poorer and poorer with every passing year as we keep spending money we don’t have, and our highly petroleum-dependent economy takes a beating. There might be a highly conspicuous turning point such as the world dumping US Treasury bonds, but it’ll be the result of long-term decline rather than any sort of short term or mid term crisis.
Old joke. A recession is when your neighbor is out of work. A depression is when you are.
In Michigan it is a depression. Unemployment is far over the percent claimed. Businesses are closing or laying off every day. The future looks glum. It is unreal how many companies are gone, restaurants have closed and bars are out of business. I see no way out.
Foreclosures and empty houses are everywhere. Many neighborhoods have a squatter problem. Michigan has a techical and educated work force. China and India have educated work forces. They work for 10 percent of our wages. The bottom will never be reached.
Is that really true, though? I have pretty lousy credit (due to my own credit card debaucheries as a younger person) in the high-600’s and I scored a nice conventional mortgage on a $150,000 loan, 30 years, just this past October. Of course, it helped that I and the wifey had scrimped and saved living in a mobile home for five years and hda 30k to put down…but even with our lousy credit we got a 6.3% loan, no adjustables, etc.
However, October 2007 isn’t March 2008, is it?
I DO know that people that have EXCELLENT credit like my Dad (who’s admittedly pretty well-off and saved his ass of for forty years for his and my Mom’s retirement) can get any loan they want.
And isn’t the foreclosure problem largely the result of Americans living beyond their means and not reading fine print on loan contracts? OTOH, I hear about “predatory” lending practices being the root cause of the problem, but if you’re financing a house through a what amounts to a payday-loan advance company, aren’t you reaping what you’ve sown for not doing your homework?
I’m pre approved for all sorts of loans for which I have never applied. Home, car, and personal loans from good to ridiculous rates. All three of my credit cards have recently increased my limits, and lowered my interest rates.
Of course, my total debt is zero, and my assets three times my annual salary, so I am the big plum, dangling there, lender wise.
Hell no. The causes were because hundreds of thousands of loans were made by companies with very little regard with the ability to pay. The developed and originated mortgages with no downpayments and very little scrutiny. If they did not create these loans the problem would have never existed. Do not say this crisis is because some guy lived beyond his means. It was a money grab by financial institutions.
It HAS to be both. It takes “two to tango”. If people were so blinded by an unbelievable mortgage (at least in it’s early years of payment) and decided to purchase a home under these terms with “no money down”, then who is the sucker? The lender?
It’s like you’re arguing that people that accept whatever credit card offers they get without reading the fine print as to the terms suddenly find themselves in serious debt and are crying foul. I fail to see the difference.
Nobody forced these people into their debt. They signed on with impunity without considering (RE: reading) the terms of their contracts with the lenders!
My sense of it is that the fed will keep pumping money into the economy in order to make the possible recession go away. This, of course, increases the risk of a recession down the road.
But let’s keep some things in perspective. The last recession in the US was in 1991. That’s an awful long time between recessions, maybe a record. And it’s not even certain that we’re in one today. As for a 1929 style depression, well that’s 79 years ago, so I wouldn’t be too worried about that either.
Also, remember that the standard of living in the US keeps going up. It doubles about every 30 years or so. So even if the economy shrinks to 50% of its size we’re still stuck with the standard of living we had in 1978, which is a lot better than 99% of the people who ever lived had it.
And these things are temporary. The depression only lasted as long as it did because FDR and Congress did dumb things that kept it going. Like protectionist measures which stopped overseas trade. Put I don’t think any politicians are that dumb today. :rolleyes:
I know there are various, usually political, arguments about what constitutes a recession, but I thought the recession of 2002 was pretty well accepted, and the “record” could be having two recessions in a single administration. Can we be clearer about what makes a recession?
I don’t believe there are many “political” arguments about what constitutes a recession - I’ve never heard the definition of a recession to be anything different than at least two consecutive quarters of a shrinking real GDP. While the early 2000s were no walk in the park, each time real GDP contracted in one quarter it rebounded (grew) somewhat in the next. So I think it is technically correct that the current hardship - if it did become a recession - would be the first of this administration.
In the U.S., most economists aren’t real big fans of that simplistic definition. Instead, they go by the NBER’s judgment. NBER will tell you that we did indeed have a recession in 2001.
Can I get a cite for this? I’m curious as to how whoever made this claim defines “standard of living.”
FDR? Can I get a cite for this as well? Things sure seemed to be improving pretty quickly after his inauguration.
